Technology

Tablet Penetration: Just the Start


While a Nielson study showing 5 percent market penetration by tablets provokes sneers, that promising growth precedes Android Honeycomb and Amazon.com's expected low-end tablet release

For a product that really just got going a little over a year ago, it shouldn't be surprising that the reach of tablets is limited. Nielsen said on Wednesday that tablet penetration is just under 5 percent, which helps put the buzz around tablets in proper perspective.But while some are using the numbers to deflate the hype around slates, the big growth of a new product category—along with a recent spike in the penetration of e-readers—suggests a bright future for tablets. Nielsen said in a survey of 12,000 U.S. consumers that 4.8 percent reported they owned a tablet in the first quarter of this year. Among other mobile devices, smartphones led the way with 36 percent penetration, followed by media players (13 percent), e-readers (9 percent), and netbooks (8 percent). While the numbers put tablets well to the rear (see chart of survey results), it's important to note how much growth tablet demand has experienced in just one year since the iPad launched in April 2010. The first competitive e-reader, the Kindle, made its debut in late 2007; by the first quarter of last year, just 3 percent of consumers said they had an e-reader, according to Nielsen. Netbooks, which have also been around for several years, were at 5.8 percent in the first quarter last year. For tablets to reach 5 percent in the 2011 first quarter is, I would argue, a very good showing when you consider that there weren't many real Android competitors to challenge the iPad. The iPad 2 didn't launch until March, so sales were likely slower for the iPad in the lead-up. We may see even more constrained growth due to limited supplies of the iPad 2. Continued high demand suggests that the category still appeals to many consumers. And as more Android devices running Honeycomb begin to roll out, we should see tablet sales accelerate. E-Readers Can Become Tablets

As we've noted too, it's also important to watch the e-reader category. With the latest update, the Nook Color is essentially a cheap Android tablet, not just an e-reader.Amazon could also offer additional low-end tablets later this year, when it's expected to announce its first foray into tablets.If big names such as Barnes & Noble and Amazon can establish solid but affordable e-reader/tablet offerings, it could be a big catalyst for tablet sales. Price definitely matters. We've seen tablets establish themselves despite selling for about $500 or more. Price decreases should stimulate even more sales. Look at what has happened in the e-reader market: Sales of e-readers went from 5 percent in the third quarter of last year, when Amazon introduced a $139 Kindle, to 9 percent in the first quarter of this year. The tablet race has far to run and I think the device has a lot of room to grow. Gartner is also bullish on tablets, predicting that 294 million will have been sold to end users by 2014. It's hard to say if those numbers will bear out. After one year on the market with a lot of new innovation on the way, however, I'd say 5 percent isn't a bad start at all. Also from GigaOM: Fixing Fragmentation: Google's Key to the Enterprise Tablet Space (subscription required) Is the Traditional Office Becoming Extinct? How to Convince Consumers to Buy Electric Cars: Free Parking With Droid X2, Moto Loses Some of Its Mojo The Structure 50: The Top 50 Cloud Innovators

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